The real estate sector has played a key role in shaping India’s economic growth. The sector not just generates substantial employment opportunities but also brings in a lot of foreign and domestic investment. The demand for housing, offices, retail, warehousing etc. is not limited to India’s metros but also tier 2 and 3 cities that have been playing an important role with their robust connectivity and infrastructure developments.
According to a report by data analytics firm PropEquity, housing transactions in the top 30 Tier II cities rose by 11% year-on-year to almost 2.08 lakh units in the previous fiscal year due to strong consumer demand fueled by solid economic expansion, infrastructure enhancements, and increasing aspiration for property ownership. Data indicates that housing unit sales in India’s 30 key Tier II cities reached 2.07 lakh units in 2023-24, up from 1.86 lakh units in the previous financial year. Interestingly, the data showed that out of these 30 cities, the top 10 cities contributed 80% to the total sales. Housing sales in India’s top seven cities continue to be robust.
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To keep this momentum going, real estate developers believe the Budget 2024 must focus on propelling this demand further.
Samir Jasuja, Founder and CEO of PropEquity said, “Increasing the interest deduction limit under Section 24B of the Income Tax Act would allow homeowners to claim a higher amount of interest paid on their home loans as a tax deduction, potentially providing significant tax relief. The single-window clearance system aims to consolidate all development authorities under one roof, ensuring timely approvals for real estate projects.”
Vivek Singhal, CEO Smartworld Developers said, “Positive outlook is being observed regarding upcoming policy adjustments, including possible decreases in Goods and Services Tax (GST) rates and initiatives to stabilize material costs. A significant advancement could come from the complete exemption of interest paid on home loans under section 24, surpassing the current cap of Rs 2 lakh, and the increase in the standard deduction limit under section 80C, which could result in a higher amount of disposable income for consumers. Furthermore, there are hopes for tax benefits and expanded deduction limits on home loans.”
The real estate industry has demonstrated remarkable resilience amidst a global economic downturn and increasing input expenses, thereby sustaining the balance between demand and supply.
“However, the industry should be acknowledged for its role in driving economic growth, generating employment, and developing top-notch infrastructure by implementing tax cuts and adjusting GST input tax credit regulations to lower property costs and boost demand in all types of assets. Additionally, the longstanding request of granting industry status to the sector should be prioritized to support the government’s goal of providing housing for all and reaching a $5-trillion economy by 2025,” said Angad Bedi, MD, BCD Group.
Mohit Malhotra, Founder & CEO, NeoLiv said, “Our primary focus is on the mid-housing segment, which is crucial for us. We expect that this will lead to the emergence of fresh development prospects due to higher budget allocations for infrastructure. This, in turn, will make it more convenient to reach city centers, which is vital for mid-range housing initiatives aimed at meeting the requirements of the middle-income population. We are eager for the budget to acknowledge the future possibilities within this segment. We are optimistic that it will encompass measures to empower emerging developers with strong financial backing and clear-cut policies, thus nurturing the expansion of the housing industry in the nation.”
“It is imperative for the government to consider increasing the cap on interest payment deductions for home loans from the current Rs 2 lakh annually to Rs 5 lakh. This move would significantly boost housing demand, particularly in light of the significant surge in housing prices and mortgage rates in the last 1-2 years,” said Vijay Harsh Jha, founder and CEO, VS Realtors (I) Pvt Ltd, a Gurugram-based property brokerage firm.